General Motors Company and Alternatives to Realize

General Motors Company and Alternatives to Realize Growth

Value discipline

According to management theorists Treacy and Wiersema, companies must always ask how they can provide value to their customers (Value Disciplines Model, 2011, Value-Based Management). Such value may be provided by operational excellence -- for example, a company that provides a high-quality product at a relatively low price, because of its ability to capitalize upon efficiency and brand marketing due to economies of scale. A company can also provide value to the customer through offering customer intimacy, or through product leadership by offering a unique type of item. However, due to the size of companies such as General Motors, its value discipline model must be based in its operational excellence. In the highly competitive market of car sales, offering low prices and/or high quality (and preferably both) by operating on an economy of scale is the only way to succeed.

Generic strategy

In the past, General Motors' strategy as a company focused upon generating a wide range of product lines, in contrast to Toyota's leaner format of offering only a few types of cars, most of which were based upon a fairly similar body prototype and marketing strategy. This is often cited as one of the reasons GM experienced such difficulty instituting quality control over its brands. Furthermore, despite the wide range of GM cars, there was relatively little diversity between the actual vehicles to justify GM's extensive variety of product offerings. GM has been pruning and getting rid of its least profitable brands as it returns to solvency as a company, after being 'bailed out' by the federal government.

However, GM's strategy remains focused on a broad market, rather than stresses a particular market segment. It is unlikely to desire to pursue either a broad or a narrow differentiation strategy, particularly given the fact that one of its most currently profitable market segments is in China. Wide-ranging appeal is required, but the products must be specifically tailored to meet each specific market's needs, particularly internationally, in terms of the cars' size and styles.

Grand strategy for General Motors

Grand strategies, as opposed to strategic management, are vision-based rather than tactical. While smaller corporations often do not have a grand strategy, for larger organizations such as General Motors grand strategies are essential. In years past, some industry analysts observed that GM's grand strategy seemed to be to oppose environmentalist legislation, because of its unwillingness to spend money on fuel economizing technology, such as hybrid vehicles. Today, GM is attempting to pursue a greener as well as a leaner strategy, as manifested by its introduction of the plug-in hybrid vehicle, the ultra-fuel efficient Chevy Volt.

Another component of the company' new strategy is globalization. "GM sold 2.35 million vehicles in China, a 29% increase, and about 136,000 more than it sold in the U.S.…. Domestically, rising truck sales are good for profits, which carry much higher profit margins than cars, and internationally, its new line of subcompacts, such as the Chevrolet Sonic, are expected to drive big sales gains in China, Brazil and India" (Byrt 2011),

While the Volt and its trucks and SUVs are far from inexpensive, GM has been striving to expand its outreach into the smaller, budget car market, an arena which it always faltered, particularly in terms its relationship with Toyota, which not only introduced the first, popular marketable hybrid car in the form of the Prius but also drew many customers away from GM with its more fuel-efficient 'family cars,' the Corolla and Camry. GM's current challenge to Toyota in this market is the Chevrolet Cruze. The Cruze was introduced in GM's international market and became Chevrolet's second-best-selling vehicle in 2010, along with the Silverado pickup (GM Company information, 2011, The New York Times).

Recommend a strategy or combination of strategies

GM is currently pursuing a variety of strategies, attempting to become a leaner company. GM's elimination of underperforming or overlapping brands, while expanding its outreach of products beyond that of the trucks and large SUVs that made it so famous is at the core of its new approach. It has shed its Hummer line, because of the large vehicle's lack of profitability in recent years and the fact that the Hummer had come to symbolize the excesses of the bad, old GM.